Sunday, August 28, 2005

Getting rattled

Booker's pieces on defence are certainly attracting the "big guns". Last week we had Adam Ingram, Minister of State for Defence rushing into print to deny the obvious – that the government had adopted a "Europe first" policy on defence procurement.

This week, we are honoured to have no lesser persons than the Chief Executive Officer of BAE Systems, Mike Turner, and Alan Sharman, Director General, Defence Manufacturers Association, attempting to take us apart in letters to The Sunday Telegraph.

Turner starts off his letter claiming that Booker article ignores "the outstanding efforts of the British Defence Industry", then arguing that BAE Systems "is dedicated to providing world class and best value systems for the UK's armed forces, which we do."

The odd thing is that Booker wasn't writing about BAE systems, or whether it offered good value. The articles have been about the Europeanisation of British Armed forces, so we plead guilty to Turner's charge.

However, since he mentions "best value" we could perhaps mention the Army's SA80 rifle, the failed Nimrod Airborne Early Warning system, which had to be cancelled at a cost of £800 million, the Merlin helicopter, which came in five years behind schedule and £800m over budget, and the eight year delay on the £2bn Bowman radio, which was to replace the 30-year-old Clansman system.

Then there is the Nimrod MRA-4 maritime patrol aircraft, which started off as a £2.2 billion contract to BAE Systems and has escalated to an estimated £3.4 billion, with a four-year time slippage. There is also the Astute Class submarine programme, being built by BAE Systems which is over-budget by £430 million and three years behind schedule. These, with the Eurofighter, the Brimstone anti-tank missile (also built by BAE Systems), plus other projects, accounted for the bulk of a £3.1 billion overspend on procurement in 2003 alone.

Completely ignoring these disasters, Turner asserts that "the UK's armed forces receive the most capable systems, as they deserve and must have," which he claims results from "the capability in the UK to develop and adapt both UK/European and also US sourced systems for today’s deployments."

He then turns to detail, arguing that the "facts and figures Christopher Booker uses for the Royal Navy"s Type-45 Destroyers simply do not hold water and are unrecognisable." He calls in aid the National Audit Office figure for the Type-45 destroyer unit cost, which he claims is £553 million. The last generation US destroyer, the DDG51, he says, cost at least £100M more than a Type-45.

Disingenuous is perhaps far too mild a word to use on Turner, but it will suffice. For sure, the Type 45 Destroyers do cost £553 each – for the ships without the missile systems. But a missile destroyer without missiles is not a lot of use. Together with the missiles, as the Defence Procurement Agency will confirm, they do indeed cost £1 billion each. The Australian DD51s are cited at £600 million each, complete with missile systems, which mean our figures are entirely correct.

Nevertheless, on this basis, Turner claims that "Industry figures show that British built warships are significantly cheaper than US warships when compared on a like for like basis." He also omits to say that there would be nothing to stop the US design being built in British yards, as is the case with the Australian order.

With that, our egregious CEO now turns to FRES, again claiming that "the facts and figures are completely wrong and do not correspond to the reality of what is in effect a programme still at the study stage." Perhaps Mr Turner should look at the official MoD website which puts the cost at £14 billion, exactly the figure we quoted.

Turner then comes up with the amazing assertion that, "in fact, in any area of defence where the MoD has decided to utilise the UK defence industry to design and develop its military systems, rather than buy from overseas, the result has been cheaper world class capability and better value for the UK taxpayer."

He concludes: "Mr Booker's well known aversion to things Euro is one thing, but to wilfully ignore the achievements of the excellent home grown defence industry is unacceptable."

Cue Booker with this week's column, where he takes on Ingram, and his claim that "ultimately, contractors are chosen on the basis of value for money for the UK taxpayer".

To refute Ingram's argument, Booker picks up on our story of the million pound bomb, suggesting that Ingram might like to consider the MoD having bought 900 French-made Storm Shadow cruise missiles for £981 when it could have waited to buy the much lighter and longer-range US JASSM missile, on sale at only £167,000 each, saving the UK taxpayers £830 million. Although not specifically intended to do so, this also knocks Turner's assertion into a cocked hat.

That leaves Alan Sharman of the Defence Manufacturers Association, who claims that, not only is Booker mistaken in his interpretation of the Europeanisation of the MoD's defence policy, but some of his factual claims are also invalid.

He also picks on FRES Take the Future Rapid Effects System, telling us that the MOD has not "proposed" a purchase of 3,500 Swedish built armoured vehicles but will run a competition that will include American, UK and European bidders. Actually, we were running a flyer on that one, to smoke out more detail. The actual situation is set out in this post.

What Sharman does not say, though, is that the British and Swedish governments have signed a co-operation agreement on the development of the FRES platform, on which basis Booker based his assertion. Sharman claims that any so-called "Swedish" bid would come from a company (Hagglunds) that is owned by a UK company, BAE Systems. That is true, but not the point. Our concern is that, by buying "European", we will not have interoperability with US forces.

Altogether, though, to attract such heavyweight denials suggests we are getting the government rattled. It will be fascinating to see how they respond to this week's column.